Principal & interest or Interest only?

Principal and interest or interest only?

Each payment reduces the amount you’ve borrowed (the principal) as well as the interest and any fees and charges. This means the outstanding balance of the loan will reduce over time.

Interest only

You pay only the interest charged to your loan that month plus any applicable fees and charges. Interest only repayments don’t reduce the outstanding balance.

At the end of your interest only repayment period (up to 5 years for Owner Occupier loans and up to 10 years for Residential Investment loans), you’ll be required to make principal and interest repayments to pay the outstanding balance in full by the end of the agreed loan term and these repayments will be highe.

Interest Rate Types

Variable

Your interest rate could fluctuate either up or down. This can affect your repayments. If the interest rate goes up, your repayments will also increase, if the interest rate falls, your repayments will also go down.

Fixed

Your interest rate is fixed at the time you settle your loan for a term of 1 to 5 years. Fixing your rate means you will know what your repayments will be and they are unaffected by interest rate changes during the fixed period.

Other features

Redraw

Some loans will allow you to access any extra repayments you've made so far.

Offset Facility

The balance in the savings account is offset against the amount owing on the home loan when interest is calculated. This means that savings in your offset account will help you to save money and repay your home loan sooner.

Repayment pause

Some loans allow you to take a break from repayments if you need to. It can be handy, but remember the payments are likely to be higher after the break.

Conditions, fees and charges apply. These may change or we may introduce new ones in the future. Full details are available on request. Lending criteria apply to approval of credit products. This information does not take your personal objectives, circumstances or needs into account. Consider its appropriateness to these factors before acting on it. Read the disclosure documents for your selected product or service, including the Terms and Conditions or Product Disclosure Statement, before deciding. Unless otherwise specified, the products and services described on this website are available only in Australia from Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.